Tuesday, June 24, 2014Last Update: 10:12 AM PT

Medi-Cal Refund Cuts Slammed by Judge Again

LOS ANGELES (CN) - For the second time in as many years, a federal judge blocked California's plan to drastically cut reimbursement rates for drugs dispensed by providers of safety-net health care. The AIDS Healthcare Foundation first sued the Golden State in 2009 after legislators imposed restrictions on providers serving recipients of the California Medical Assistance Program, requiring that they purchase prescription drugs only from that program, more commonly known as Medi-Cal. Previously, providers could purchase drugs both on the open market and from the state. While lawmakers intended to streamline Medi-Cal and halt overpayment for drugs in the wake of California's fiscal crisis, the safety-net providers said the end result meant dramatically smaller reimbursements and a corresponding drop in access to quality care for Medi-Cal recipients. U.S. District Judge Manuel Real last year found that the revised reimbursement rates violated federal law and ordered state officials to return to the former scheme. The state appealed, and in the meantime the federal agency that oversees the setting of Medicaid rates approved California's revisions. The 9th Circuit sent the case back to Real to assess the impact of the federal approval on low-income health care providers. Reaffirmed his previous injunction, Real ruled last week that federal approval did not change the fact that lawmakers had enacted the scheme without permission from Medicaid officials and. AIDS Healthcare Foundation welcomed the seven-page ruling, noting that statewide cutbacks and the ensuing statutory changes have forced safety net providers out of the Medi-Cal program - making it more difficult for patients to receive quality care. "The rate cuts California officials forced on Medi-Cal safety net providers risked cutting lifesaving pharmacy services down to the bone for AIDS patients who depend on AHF or other nonprofit providers for their lifeblood," AIDS Healthcare Foundation President Michael Weinstein said. "We believed that California's actions - trying to balance its budget on the backs of some of the poorest and most vulnerable citizens by squeezing safety net providers like AHF - were not only illegal under state and federal law, but that they also threatened the very existence of such nonprofit providers. We are grateful that Judge Real reaffirmed and upheld his ruling granting a permanent injunction blocking further implementation of the law."